Chart of the day: Further upside seen in Shanghai A shares
The A shares on the Shanghai stock exchange powered ahead on Monday, bursting through long-term chart resistance on the best volume in three months. This suggests many were caught out as the index gapped higher, surprised by the rally and forced to take cover. Volatility is back up at the mean of the previous quarter and moving averages have turned bullish again. For these reasons, the move should continue to 3,300 or maybe 3,400 points, a 50 per cent retracement of the losses at the very beginning of this year. This is despite the index being currently overbought as the MACD and momentum have only just turned bullish. This might be wave 3 of an A, B, C correction.
Nicole Elliott is a technical analyst